Opec agrees to increase oil production by a million barrels

Opec agrees to increase oil production by a million barrels

The daily increase was announced after ministers from the group met in Vienna.

Oil production (AP Photo/Fernando Llano, File)

Countries in the Opec oil cartel have agreed to a new oil output level that effectively increases production by almost a million barrels per day.

The increase was announced as ministers from the group met in Vienna.

The production increase will partly undo a 1.2 million barrel cut Opec agreed in late 2016 that has helped push up the price of oil.

Ahead of Friday’s meeting, Opec’s largest producer, Saudi Arabia, was seen to be open to higher production but Iran had been hesitant.

US President Donald Trump has been calling publicly for the cartel to help lower prices.

Donald Trump’s policies are thought to have helped increase the cost of oil (AP Photo/Evan Vucci)

Emirati energy minister Suhail al-Mazrouei said the decision was to fully comply with Opec’s self-imposed production limit, and the difference between that and current levels is “a little bit less than one million barrels”.

How that translates into effective production increases is uncertain, as some Opec countries cannot easily ramp up production.

Iran has been hit by US sanctions that hinder its energy exports, and Venezuela’s production has dropped amid domestic political instability.

The price of oil jumped after the announcement, with the international benchmark, Brent, gaining 1.61 dollars to 74.66 dollars a barrel.

Non-Opec countries like Russia had agreed in 2016 to participate in Opec’s effort to raise prices, cutting 600,000 barrels a day of its own production. They will discuss with Opec on Saturday on whether to increase their own production.

The production limits by the Organisation of the Petroleum Exporting Countries and Russia since 2016 have helped increase oil prices, with the benchmark US crude contract hitting its highest level in more than three years in May.